April 18, 2004
BY MITCH ZACKS SUN-TIMES COLUMNIST

"Every investor who buys a stock does so because he believes the intrinsic value of the stock is greater than the stock's current market price.

A value investor buys stocks he thinks are underpriced because the stocks have fallen out of favor with the market. Think of a value investor as a home buyer who looks for fixer-uppers, and wants to get the most square feet for his dollar. By definition the value investor is going to wind up with companies that most people consider junk.

A growth investor, on the other hand, is looking to buy stocks that are increasing rapidly in price because the companies are growing earnings at a high rate. Just like the value manager, the growth manager is looking to buy stock in a company whose intrinsic value is greater than the stock's current market value. Think of the growth investor as someone who is looking to buy a house in a fancy neighborhood where everybody wants to live. By definition, a growth manager should wind up with stocks that your average investor thinks are overpriced. "  »»» Click Here For More